The following transactions are from Ohlm Company. (Use 360 days a year.) Year 1 Dec. 16 Accepted a $10,700, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Todd note. Year 2 Feb. 14 Received Todd’s payment of principal and interest on the note dated December 16. Mar. 2 Accepted a(n) $6,600, 8%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co. 17 Accepted a(n) $3,300, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable. Apr. 16 Privet dishonored her note. May 31 Midnight Co. dishonored its note. Aug. 7 Accepted a(n) $7,900, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Co. Sep. 3 Accepted a(n) $3,210, 60-day, 11% note in granting Noah Carson a time extension on his past-due account receivable. Nov. 2 Received payment of principal plus interest from Carson for the September 3 note. Nov. 5 Received payment of principal plus interest from Mulan for the August 7 note. Dec. 1 Wrote off the Privet account against the Allowance for Doubtful Accounts. Required: 1-a. First, complete the table below to calculate the interest amount at December 31, Year 1. 1-b. Use the calculated value to prepare your journal entries for Year 1 transactions. 1-c. First, complete the table below to calculate the interest amounts. 1-d. Use those calculated values to prepare your journal entries for Year 2 transactions. 2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The following transactions are from Ohlm Company. (Use 360 days a year.)

Year 1

Dec.		16		Accepted a $10,700, 60-day, 8% note in granting Danny Todd a time extension on his past-due account receivable.
		31		Made an adjusting entry to record the accrued interest on the Todd note.

Year 2

Feb.	14	Received Todd’s payment of principal and interest on the note dated December 16.
Mar.	2	Accepted a(n) $6,600, 8%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co.
	17	Accepted a(n) $3,300, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.
Apr.	16	Privet dishonored her note.
May	31	Midnight Co. dishonored its note.
Aug.	7	Accepted a(n) $7,900, 90-day, 10% note in granting a time extension on the past-due account receivable of Mulan Co.
Sep.	3	Accepted a(n) $3,210, 60-day, 11% note in granting Noah Carson a time extension on his past-due account receivable.
Nov.	2	Received payment of principal plus interest from Carson for the September 3 note.
Nov.	5	Received payment of principal plus interest from Mulan for the August 7 note.
Dec.	1	Wrote off the Privet account against the Allowance for Doubtful Accounts.

Required:
1-a. First, complete the table below to calculate the interest amount at December 31, Year 1.
1-b. Use the calculated value to prepare your journal entries for Year 1 transactions.
1-c. First, complete the table below to calculate the interest amounts.
1-d. Use those calculated values to prepare your journal entries for Year 2 transactions.
2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

Required 1A
Required 18
Required 10 Required 10
Required 2
Use those calculated values to prepare your journal entries for Year 2 transactions.
View journal entry worksheet
View transaction list
No
Date
General Journal
Debit
Credit
Feb 14
Cash
10.870
Notes receivable-D. Todd
10,700
Interest revenue
Interest receivable
36
Mar 02
Notes receivable-Midnight Co
6,600
Accounts receivable-Midnight Co
6,600
Mar 17
Notes receivable-A. Privet
3,300
Accounts receivable-A. Privet
3.300
Apr 16
Accounts receivable-A. Privet
3,310
Interest revenue
19
Notes receivable-A. Privet
3,300
Мay 31
Accounts receivable-Midnight Co
6,732
Interest revenue
132
Notes receivable-Midnight Co
6,600
Aug 07
Notes receivable-Mulan
7.900
Accounts receivable-Mulan
7.900
7
Sep 03
Notes receivable-N. Carson
3.210
Accounts receivable-N. Carson
3,210
Nov 02
Cash
3.269
Interest revenue
50
Notes receivable-N. Carson
3.210
Nov 05
Cash
8.008
Interest revenue
198
Notes receivable-Mulan
7.000
10
Dec 01
Allowance for doubtful accounts
3,319
Accounts receivable-A. Privet
3,319
< Required 1C
Required 2 >

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